United States Court of Appeals

For the Eighth Circuit

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No. 16-1791

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Twin City Pipe Trades Service Association, Inc.,

lllllllllllllllllllll Plaintiff - Appellee,

v.

Wenner Quality Services, Inc., a Minnesota corporation, doing business as Mr.

Rooter of South Central MN,

lllllllllllllllllllll Defendant - Appellant.

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Appeal from United States District Court 

for the District of Minnesota - Minneapolis

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 Submitted: May 9, 2017

 Filed: August 29, 2017

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Before SMITH, Chief Judge, COLLOTON and KELLY, Circuit Judges.

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COLLOTON, Circuit Judge.

Twin City Pipe Trades Service Association is attempting to recover unpaid

fringe-benefit contributions allegedly due under a collective bargaining agreement. 

The district court granted summary judgment for the Association on the ground that

Wenner Quality Services, Inc., was precluded by a previous lawsuit from disputing

liability for the contributions as an alter ego of a signatory of the agreement. The
court then awarded damages and injunctive relief to the Association. We agree that

the Association was entitled to judgment on liability, but we conclude that the court

erred in awarding certain damagesto the Association. Accordingly, we affirm in part

and reverse in part.

I.

In 2004, Shawn and Sara Wenner purchased Mankato Plumbing & Heating,

Inc. The Wenners were Mankato Plumbing’s only shareholders. Mankato Plumbing

was party to a collective bargaining agreement with two local unions for plumbers

and pipefitters. In 2006, the Wenners purchased a Mr. Rooter franchise and signed

the franchise agreement individually asthe designated franchisees. They operated the

franchise using Mankato Plumbing’s facility, employees, and equipment, while

Mankato Plumbing paid fringe-benefit contributions pursuant to the CBA on behalf

of Mr. Rooter.

In 2010, the Wenners reorganized their businesses. At the end of January,

Mankato Plumbing ceased operations, and the Wenners formed S&S Thermo

Dynamics, Inc., to take over the commercial plumbing operations. Around thatsame

time, the Wenners formed Wenner Quality Services, Inc., (WQS) to provide

residential plumbing services. Shawn wrote to the unions that Mankato Plumbing

was ceasing operations, but that S&S would assume Mankato Plumbing’s

responsibility under the CBA. In a separate letter, Shawn informed the unions that

Mr. Rooter would be discontinuing its operations; in fact, however, WQS continued

to use the Mr. Rooter name in its residential plumbing operations.

In 2011, the Association, which served as a trustee responsible for collecting

the fringe-benefit contributions due under the CBA, discovered that Mr. Rooter was

still operating. It sued S&S, Mankato Plumbing, and Shawn Wenner under the

Employee Retirement Income Security Act, 29 U.S.C. §§ 1132, 1145, alleging that

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they had failed to pay fringe-benefit contributions arising from work performed for

Mr. Rooter from February 2010 onward. The Association did not sue WQS in the

S&S Litigation, because it was not aware of WQS until Shawn Wenner disclosed that

entity’s existence after the deadline to amend pleadings had passed. 

The defendants in the S&S Litigation moved for summary judgment, and the

district court held a hearing. The court granted summary judgment for Mankato

Plumbing, because Mankato Plumbing was no longer doing business, and there was

no claim that the entity failed to make contributions before it ceased operations in

January 2010. The court, however, denied S&S’s motion for summary judgment and

effectively granted summary judgment for the Association on the issue of liability. 

The court concluded that S&S, as the successor signatory to the CBA, and WQS, as

Mr. Rooter’s operator, were alter egos of one another. In other words, the court

determined that the companies were independent of each other in form only, and that

they were used as a subterfuge to justify wrongdoing. On that basis, the court held

S&S liable for the past-due contributions on behalf of Mr. Rooter. 

In a subsequent order, the district court clarified that “[h]aving resolved the

liability issue in favor of [the Association], . . . the only outstanding issue before the

Court is the amount of damages owed to [the Association].” The court never made

an award of damages, however, because S&S and Shawn Wenner filed for

bankruptcy, and the case was administratively terminated. 

In 2014, the Association brought this action under ERISA against WQS and

SaraWenner. The complaintsought the same unpaid fringe-benefit contributionsthat

the Association pursued in the S&S Litigation, plus injunctive relief. The district

court dismissed Sara Wenner pursuant to a stipulation after she filed for bankruptcy. 

On cross-motionsfor summary judgment, the district court then determined that issue

preclusion prevented WQS from disputing its liability as an alter ego of S&S. 

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The court awarded the Association unpaid fringe-benefit contributions,interest,

and attorney’s fees and costs, but denied its request for liquidated damages. The

court also enjoined WQS from refusing to submit monthly fringe-benefit

contributions to the Association for Mr. Rooter employees or other covered

employees for so long as WQS has a contribution obligation. The court ordered WQS

to post a bond of $18,000 “as a security for three months’ future contributions.” The

court later issued an order amending its judgment, clarifying its previous judgment

and stating more broadly that WQS was enjoined from failing to comply with its

obligations under the CBA. The injunction forbade WQS from refusing to submit

monthly reports of hours worked by Mr. Rooter employees or other covered

employees, and refusing to submit monthly fringe-benefit contributions for so long

as WQS has a contribution obligation.

II.

WQS argues on appeal that the district court erred by applying offensive

collateral estoppel on the issue of alter ego liability. The general rule on issue

preclusion, also known as collateral estoppel, is that “[w]hen an issue of fact or law

is actually litigated and determined by a valid and final judgment, and the

determination is essential to the judgment, the determination is conclusive in a

subsequent action between the parties, whether on the same or a different claim.” 

B & B Hardware, Inc. v. Hargis Indus., Inc., 135 S. Ct. 1293, 1303 (2015) (alteration

in original) (quoting Restatement (Second) of Judgments § 27 (1982)). A court

should not, however, apply offensive collateral estoppel when it would be unfair to

a defendant. See Parklane Hosiery Co. v. Shore, 439 U.S. 322, 331 (1979). 

Two elements of issue preclusion are undisputed: WQS does not dispute that

the issue of alter ego liability is the same in both cases or that the alter ego

determination was essential to the prior judgment. A third element is identity of the

parties. Although WQS was not a party in the S&S Litigation, issue preclusion can

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apply “when it can be said that there is ‘privity’ between a party to the second case

and a party who is bound by an earlier judgment.” Richards v. Jefferson County, 517

U.S. 793, 798 (1996). A closely held corporation is in privity with its shareholder,

see Restatement (Second) of Judgments § 59(3)(b) & cmt. e (1982), and WQS

conceded at oral argument that it is in privity with Shawn Wenner, who was a party

in the S&S Litigation. Shawn Wenner, in turn, was also in privity with S&S, another

party in the first case. As such, WQS can be bound by the prior judgment. 

But WQS disputes a fourth element. The company argues that there was no

valid and final judgment in the S&S Litigation, because the court never awarded

damages and entered a final judgment. Issue preclusion, however, has been applied

“to matters resolved by preliminary rulings or to determinations of liability that have

not yet been completed by an award of damages or other relief.” In re Nangle, 274

F.3d 481, 485 (8th Cir. 2001) (internal quotations omitted) (quoting 18 Charles Alan

Wright, Arthur R. Miller, & Edward H. Cooper, Federal Practice and Procedure

§ 4434 (1981)). “[F]inality for purpose[s] of appeal under [28 U.S.C. § 1291] is not

necessarily the finality that is required for issue preclusion purposes.” John Morrell

& Co. v. Local Union 304A of United Food & Commercial Workers, 913 F.2d 544,

563 (8th Cir. 1990). Quoting Judge Friendly, this court observed that “[f]inality in

the context [of issue preclusion] may mean little more than that the litigation of a

particular issue has reached such a stage that a court sees no really good reason for

permitting it to be litigated again.” Id. (alterations in original) (quoting Lummus Co.

v. Commonwealth Oil Ref. Co., 297 F.2d 80, 89 (2d Cir. 1961)).

We conclude that the district court’s orders regarding its alter ego

determination in the S&S Litigation constitute a valid and final judgment for

purposes of issue preclusion. The court in the first case gave the parties ample

opportunity to be heard on alter ego liability. Following briefing and a hearing, the

court concluded that S&S and WQS were alter egos, and the court filed a reasoned

order that explained the determination. Although the amount of damages remained

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unresolved, there was no reason to believe that the court’s judgment on liability was

“tentative or likely to be changed.” In re Nangle, 274 F.3d at 485. 

WQS complains that Shawn Wenner and S&S had no opportunity to appeal in

the S&S Litigation, but the unavailability of appellate review does not by itself make

issue preclusion inappropriate. In re Nangle, 274 F.3d at 485; see Johnson Steel St.

Rail Co. v. William Wharton, Jr., & Co., 152 U.S. 252, 261 (1894). It is “merely one

factor to consider in determining whether issue preclusion applies.” John Morrell &

Co., 913 F.2d at 563. Here, the inability of Shawn Wenner and S&S to appeal in the

S&S Litigation was a product of their own making: They voluntarily filed for

bankruptcy, thus triggering an automatic stay and leading the case to be

administratively terminated. Under these circumstances, the absence of appellate

review in the first case did not require the court to allow relitigation of the alter ego

determination. Cf. Greenleaf v. Garlock, Inc., 174 F.3d 352, 360-61 (3d Cir. 1999). 

WQS argues that aside from the traditional elements, issue preclusion is

inapplicable when the underlying legal issue involves an alter ego determination. In

Crest Tankers, Inc. v. National Maritime Union of America, 796 F.2d 234 (8th Cir.

1986), this court concluded that collateral estoppel on a determination of alter ego

status wasinappropriate. In that case, the second court faced a dispute about whether

there was privity between the party who lost in the first case and the parties against

whom preclusion was asserted on alter ego liability in the second. This court

observed that “the procedural issue of privity is, in essence, also the substantive issue

to which [the defendant] would apply collateral estoppel: Are these entities so

closely allied as to be considered the same?” Id. at 239. Because of “[t]he circularity

involved in answering this question,” the court declined to apply collateral estoppel. 

Id.

This case does not raise the same problem of circularity. WQS is indisputably

in privity with Shawn Wenner, a party in the first case, because Shawn Wenner is one

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of the two shareholders of WQS. See In re Gottheiner, 703 F.2d 1136, 1139-40 (9th

Cir. 1983); Restatement (Second) of Judgments § 59(3)(b) & cmt. e. For the same

reason, Shawn Wenner is in privity with S&S. S&S contested alter ego liability in

the first case, and Shawn Wenner had every incentive to do so, either on his own or

as the president and majority shareholder of S&S. The determination that WQS was

in privity with a party in the first case is therefore separate from the determination

whether S&S and WQS are alter egos of one another.

For these reasons, we conclude that all of the elements required to apply issue

preclusion are present here. WQS does not raise any additional fairness

considerations that would preclude application of the doctrine in this circumstance. 

We therefore affirm the district court’s determination that WQS is liable for the

unpaid fringe-benefit contributions due from Mr. Rooter. 

III.

WQS next argues that the district court erred in granting certain damages and

relief to the Association. We conclude that the Association has a right to collect

contributions under the CBA, but that two categories of damages were not authorized

by ERISA and that the award should be reduced accordingly. We also uphold the

district court’s grant of injunctive relief.

A.

WQS first argues that the Association had no right to collect certain benefits

under the CBA, so it lacks Article III standing to bring certain claims. This is not

really an argument about standing: the Association was injured by not receiving the

contributions, the injury was caused by WQS’s non-payment, and an award of

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damages would remedy the injury. WQS is actually pressing an argument on the

merits—i.e., that the Association has no right to the contributions.

The CBA providesfor the collection of ten categories of contributions, and six

are in dispute: Credit Union, Working Fee Fund, TCPT Pension, Pension

Supplement, International Training Fund, and Industry Fund benefits. The CBA

states that employers must send the Industry Fund payments to the Minnesota

Mechanical Contractors Industry Fund. The CBA does not otherwise address where

the disputed payments should be sent or who should collect these payments. 

The “practice, usage and custom” of the parties are significant when

interpreting a CBA. Transp.-Commc’n Emps. Union v. Union Pac. R.R. Co., 385

U.S. 157, 161 (1966). The evidence showsthat the Association traditionally collected

the disputed payments. The Association’s executive administrator averred that the

Association collects all of the disputed benefits, and that employers subject to the

CBA must submit one check to the Association for all of the relevant contributions. 

S&S, the successor signatory to the CBA, sent the disputed payments to the

Association. There is no evidence that the disputed payments were sent to any other

organization. Although the CBA provided that certain payments should go to the

Minnesota Mechanical Contractors Industry Fund, the administrator of that fund

denied collecting any contributions. The Association therefore has a right to recover

these payments.

B.

ERISA permits a fiduciary of a plan, like the Association, to bring a civil action

to enforce the obligations arising under a plan or a collectively bargained agreement. 

29 U.S.C. §§ 1132(a)(3), (g)(2), 1145. Under ERISA, “‘employee benefit plan’ or

‘plan’ means an employee welfare benefit plan or an employee pension benefit plan

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or a plan which is both an employee welfare benefit plan and an employee pension

benefit plan.” Id. § 1002(3). Because § 1132 is limited to civil actions enforcing

obligations under a “plan,” any contributions that fall outside the definition of an

employee benefit or employee pension benefit plan are not recoverable in an ERISA

action. See U.A. Local No. 467 Pension Tr. Fund v. Hydra Ventures Inc., No. C-12-

346, 2013 WL 1007311, at *9-10 (N.D. Cal. Mar. 13, 2013); Williams v. Salt City

Painting, Inc., No. 91-CV-0320, 1992 WL 265944, at *13 (N.D.N.Y. Oct. 1, 1992). 

The Association may recover only unpaid contributions to a plan established

for a purpose specified in the statute. These purposes include providing retirement

income to employees, and providing participants with medical benefits, benefits in

the event of sickness, accident, disability, death or unemployment, or other benefits,

such as vacation benefits, training programs, and scholarship funds. See 29 U.S.C.

§ 1002(1), (2). 

WQS contends that the Association was not entitled to recover the Credit

Union, the Working Fee, and the Industry Fund contributions, because these

contributions do not arise under an ERISA plan. The district court thought WQS

raised this argument too late in the litigation, but the argument was timely raised in

response to the Association’s motion for judgment, because that is when the amount

of damages was ripe for resolution. At oral argument in this court, the Association

conceded that the Working Fee and the Industry Fund do not arise under a “plan” as

defined by ERISA, and thus are non-ERISA damages. Therefore, unpaid

contributions due to these funds should not have been awarded as damages in this

ERISA lawsuit.

As to the Credit Union fund, the Association presented evidence that

contributionsserved to fund vacation benefits, a permissible element of an employee

welfare benefit plan. See 29 U.S.C. § 1002(3). An official of the Minnesota

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Mechanical Contractors Association averred that contributions to vacation funds

“include[] the credit union contributions.” The 2008 Working Agreement similarly

refersto “Credit Union and Vacation/SavingsRequirements.” Thus, we conclude that

the court properly allowed the Association to recover these ERISA-based damages.

C.

WQS also contends that the district court erred in granting a permanent

injunction. ERISA permits a fiduciary of a plan to seek recovery of unpaid

contributions, interest on those contributions, reasonable attorney’s fees and costs of

the action, and such other legal or equitable relief as the court deems appropriate. 29

U.S.C. § 1132(g)(2). Equitable relief can include enjoining a recalcitrant employer

from failing to pay contributions to an ERISA fund arising under a collective

bargaining agreement. Laborers Fringe Benefit Funds Detroit & Vicinity v. Nw.

Concrete & Constr., Inc., 640 F.2d 1350, 1351-53 (6th Cir. 1981) (per curiam). 

Citing Varity Corp. v. Howe, 516 U.S. 489 (1996), and Wald v. Southwestern Bell

Corp. Customcare Medical Plan, 83 F.3d 1002 (8th Cir. 1996), WQS contends that

injunctive relief was inappropriate here because the district court provided adequate

relief in the form of money damages. In Varity Corp., the Court stated that “where

Congress elsewhere provided adequate relief for a beneficiary’s injury, there will

likely be no need for further equitable relief, in which case such relief normally would

not be ‘appropriate.’” 516 U.S. at 515. But here, the Association did not seek only

payment for past unpaid contributions; it sought an order requiring WQS to fulfill its

ongoing obligations under the CBA. The injunction provides a separate remedy,

independent of damages, to ensure that WQS will pay future fringe-benefit

contributions. Therefore, the district court did not err in granting injunctive relief. 

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For the foregoing reasons, the judgment of the district court is affirmed in part

and reversed in part. The case is remanded for the district court to exclude

contributions due to the Working Fee and Industry Fund from the damages award,

and to reduce the award of interest accordingly.

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